Barry Brooks, Heston C. King, Stefen Douglas Brooks, Johanna Barton, and Jesse Rodriguez Benavides v. Excellence Mortgage, Ltd. ( 2014 )

Fourth Court of Appeals
San Antonio, Texas
OPINION
No. 04-13-00106-CV
Barry BROOKS, Heston C. King, Stefen Douglas Brooks, Johanna Barton,
and Jesse Rodriguez Benavides,
Appellants
v.
EX
EXCELLENCE MORTGAGE, LTD.,
Appellee
From the 225th Judicial District Court, Bexar County, Texas
Trial Court No. 2013-CI-01173
Honorable Peter A. Sakai, Judge Presiding
Opinion by: Patricia O. Alvarez, Justice
Sitting: Catherine Stone, Chief Justice
Marialyn Barnard, Justice
Patricia O. Alvarez, Justice
Delivered and Filed: May 30, 2014
AFFIRMED
In 2010, Appellants Barry Brooks, Heston C. King, Stefen Douglas Brooks, and Jesse
Rodriguez Benavides (collectively Brooks Appellants) left their employment at Appellee
Excellence Mortgage, Ltd. Several days before their departure, Appellant Johanna Barton’s
employment was terminated by Excellence. After Appellants began work for Premier Nationwide
Lending, Excellence filed suit seeking injunctive relief, inter alia, to prevent Appellants from using
Excellence’s confidential information to contact Excellence customers.
04-13-00106-CV
Appellants filed a counterclaim seeking commissions for loans that closed after they left
Excellence’s employment. Appellants asserted various claims, including interference with
prospective business relations and an antitrust violation under the Texas Business and Commerce
Code. Excellence sought summary judgment on each claim and Appellants filed a cross-motion
for partial summary judgment.
The trial court granted summary judgment in favor of Excellence and denied all relief
sought by Appellants. We affirm the trial court’s order.
FACTUAL BACKGROUND
Appellants worked as loan officers for Excellence Mortgage during 2010. Presumably all
of the appellants signed an employment agreement, employee confidentiality agreement, and a
production personnel compensation plan. 1 In September of 2010, the owners of Excellence began
the process of restructuring the company. The restructuring included discussions with Georgetown
Mortgage, LLC and ultimately the creation of a new entity, MG Mortgage.
During the last week of September 2010, Excellence loan officers underwent training
provided by a corporate trainer from Georgetown. Although no actual compensation or benefits
were discussed, the Brooks Appellants contend the new terms of their possible employment at
Georgetown were much less favorable than at Excellence. The Brooks Appellants each decided
employment at Georgetown was not acceptable.
A. Appellants Leave Excellence
During the last week of September, 2010, Appellant Johanna Barton was terminated from
her employment with Excellence. On October 1, 2010, the Brooks Appellants each tendered
signed letters of resignation to Excellence. By October 4, 2010, all of the appellants had agreed
1
We note the appellate record does not have copies of each agreement signed by the individual appellants. However,
this fact does not appear to be in question.
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to accept employment as loan officers at Premier Nationwide Lending. Appellants notified the
Excellence loan customers, with whom they had been working, of their move to Premier.
Appellants contend that each customer chose to transfer their files from Excellence to Premier so
they could work with the same loan officers to complete their transactions. Each customer
subsequently sent notification to Excellence requesting their files be transferred to Premier.
B. Procedural Background
On October 7, 2010, Excellence filed suit for temporary restraining order, injunction, and
damages against Premier and each appellant. 2 The trial court granted a temporary restraining order
enjoining Appellants and Premier from, among other things, using Excellence’s confidential
information to contact any of Excellence’s customers with whom the individual appellants had
served as loan officers while employed by Excellence. Shortly thereafter, Excellence settled their
claims with Premier. Premier returned the loan files in question and agreed not to accept further
transfers. Appellants assert this action resulted in a lost ability to earn commissions thereby
causing them severe financial losses.
On March 14, 2011, Appellants filed a counter-claim against Excellence asserting various
claims, including breach of contract, unlawful restraint of trade, and interference with prospective
business relations. In November of 2011, Excellence filed a motion for summary judgment as to
Appellants’ breach of contract, tortious interference, and antitrust claims. Appellants filed a
response to the summary judgment motion and, in June of 2012, Appellants filed a cross-motion
for traditional and no-evidence partial summary judgment as to Excellence’s claims: breach of
contract, breach of fiduciary duty, tortious interference with prospective contracts, trade secret
2
Although there were other parties to the injunction, only Excellence and Appellants Barry Brooks, Heston C. King,
Stefen Douglas Brooks, Johanna Barton, and Jesse Rodriguez Benavides are relevant to this appeal. Accordingly, we
restrict our discussion to these parties.
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misappropriation, breach of contract claim arising out of settlement agreement with Premier, and
fraud.
After a hearing, on July 18, 2012, the trial court granted summary judgment in favor of
Excellence as to Appellants’ (1) breach of contract claims for loans closed and funded after
October 1, 2010, (2) interference with prospective business relations claims, and (3) antitrust
claims. All other claims within both summary judgment motions were denied. The trial court
subsequently severed all the issues disposed of by the July 18, 2012 order on Appellants’ and
Excellence’s summary judgment motions.
SUMMARY JUDGMENT IN FAVOR OF EXCELLENCE
A. Standard of Review
1. Review of Trial Court Grant of Summary Judgment in Favor of Excellence
An appellate court reviews a traditional summary judgment de novo. Valence Operating
Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Roehrs v. FSI Holdings, Inc., 246 S.W.3d 796,
805 (Tex. App.—Dallas 2008, pet. denied). To obtain summary judgment, the movant must
establish there are no issues of material fact and that it is entitled to judgment as a matter of law.
TEX. R. CIV. P. 166a(c); Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 846 (Tex. 2005);
Nixon v. Mr. Prop. Mgmt., 690 S.W.2d 546, 548 (Tex. 1985). “An appellate court reviewing a
summary judgment must consider all the evidence in the light most favorable to the nonmovant,
indulging every reasonable inference in favor of the nonmovant and resolving any doubts against
the motion.” Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 756 (Tex. 2007) (per
curiam); accord W. Invs., Inc. v. Urena, 162 S.W.3d 547, 550 (Tex. 2005); Nixon, 690 S.W.2d at
548–49. When reviewing a summary judgment, “we must consider whether reasonable and fair-
minded jurors could differ in their conclusions in light of all the evidence presented.” Goodyear
Tire, 236 S.W.3d at 755.
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2. Review of Trial Court’s Denial of Summary Judgment in Favor of Appellants
Excellence asserts this court does not have jurisdiction over the trial court’s denial of
Appellants’ motion for summary judgment because the trial court’s order severing the case does
not permit Appellants to seek review of the trial court’s denial of their motion for summary
judgment. Appellants contend the motions for summary judgment are competing motions.
The general rule is that a party cannot appeal the denial of a motion for summary judgment.
See Cont’l Cas. Co. v. Am. Safety Cas. Ins. Co., 365 S.W.3d 165, 172 (Tex. App.—Houston [14th
Dist.] 2012, pet. denied). “The party’s remedy is to assign error to the trial court’s judgment
ultimately rendered following trial on the merits.” United Parcel Serv., Inc. v. Tasdemiroglu, 25
S.W.3d 914, 916 (Tex. App.—Houston [14th Dist.] 2000, pet. denied). While the appellate court
does not generally review the denial of summary judgment, we may review such a denial when
both parties move for summary judgment and the trial court grants one motion and denies the
other. Tex. Mun. Power Agency v. Pub. Util. Comm’n of Tex., 253 S.W.3d 184, 192 (Tex. 2007).
We conclude that Appellants’ claims as to breach of fiduciary duty, breach of contract—
confidential information, tortious interference, and misappropriation of trade secrets stem from
and are based on the same factual elements and legal analysis as Excellence’s motion for summary
judgment. Accordingly, we have jurisdiction over these claims.
3. Competing Motions
To prevail on its motion for traditional summary judgment, each movant was required to
conclusively disprove at least one essential element of each of the nonmovant’s claims. Elliott–
Williams Co. v. Diaz, 9 S.W.3d 801, 803 (Tex. 1999); Doe v. Boys Clubs of Greater Dall., Inc.,
907 S.W.2d 472, 476–77 (Tex. 1995). “When both sides move for summary judgment and the
trial court grants one motion and denies the other, the reviewing court should review both sides’
summary judgment evidence [,] . . . determine all questions presented[,] . . . [and] render the
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judgment that the trial court should have rendered.” FM Props. Operating Co. v. City of Austin,
22 S.W.3d 868, 872 (Tex. 2000) (citations omitted); accord Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).
B. Breach of Contract/Quantum Meruit Claims
1. Johanna Barton Breach of Contract Claims against Excellence
Barton was terminated for cause and did not submit a letter of resignation. We, therefore,
address her breach of contract claim separately. 3
Appellants do not address Barton individually in Appellants’ Brief. However, in their reply
brief, Appellants contend Excellence provided no evidence to substantiate Barton was terminated
for cause. Accordingly, they contend summary judgment as to Barton’s compensation prior to
termination must be reversed.
The only evidence regarding Barton’s termination contained within the appellate record
appears to be the testimony elicited during the deposition of Kevin Sullivan, Excellence’s chief
financial officer. See generally TEX. R. APP. P. 34. Sullivan testified that Barton was terminated
due to her poor attitude. Barton does not point this court to any additional evidence or any
controverting evidence. Accordingly, we conclude the trial court properly granted summary
judgment for Excellence as to breach of contract claims concerning Appellant Barton.
We next address the contractual claims asserted by the Brooks Appellants.
2. The Brooks Appellants’ Breach of Contract Claims against Excellence
In their cross-pleadings, the Brooks Appellants assert they closed loans prior to, during,
and after Georgetown took control of Excellence’s business and were simply waiting to receive
3
Because Barton was subsequently hired by Premier, her remaining claims are properly addressed with the other
appellants, specifically the interference with prospective business relations and antitrust under the Texas Business and
Commerce Code claims.
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their commissions on these loans. Excellence’s failure and refusal to pay the commissions on such
loans, referred to by the parties as “pipeline customers,” constituted a breach of contract.
Excellence counters there could be no breach of the employment agreement because the
Brooks Appellants were not legally entitled to commissions on loans that closed and funded after
they resigned. As per their employment agreements, the Brooks Appellants were compensated for
all their work as loan officers in accordance with the production personnel compensation plan.
More specifically, Excellence contends the Brooks Appellants were paid for employment through
October 1, 2010, and they were properly compensated in accordance with the company’s
Production Personnel Compensation Plan. The plan provides that
In the event of voluntary termination, death or long-term disability, the Company
will pay the Loan Officer, or his/her estate, commissions (above any current deficits
to the Company) on any loan closed and funded . . . up to and includ[ing] the
effective date of termination, death or long-term disability, except as herein
provided. With respect to a voluntary termination, it is the Company’s general
policy not to pay any commissions on loans that close and fund after the effective
date of the Loan Officer’s termination.
2. Elements of a Breach of Contract Claim
To recover on an action for breach of contract, a plaintiff must prove “(1) the existence of
a valid contract, (2) performance or tendered performance by the plaintiff, (3) breach of the
contract by the defendant, and (4) damages sustained by the plaintiff as a result of the breach.”
Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex. App.—Houston [14th Dist.] 2005, pet. denied).
Whether a party’s conduct constitutes a breach of contract is a question of law. See E.P. Towne
Ctr. Partners, L.P. v. Chopsticks, Inc., 242 S.W.3d 117, 123 (Tex. App.—El Paso 2007, no pet.).
If the party opposing summary judgment relies on an affirmative defense, the party must present
summary judgment evidence sufficient to raise a fact issue on each element of the defense to avoid
summary judgment. Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984); Parker v. Dodge,
98 S.W.3d 297, 300 (Tex. App.—Houston [1st Dist.] 2003, no pet.).
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3. Voluntary versus Involuntary Termination
The Brooks Appellants argue they were involuntarily terminated by Excellence and,
therefore, Excellence breached their employment contracts by failing to pay commissions
associated with approximately ninety-one pending mortgage loans. Although each of the Brooks
Appellants submitted a letter of resignation, they contend that they later realized they could not
have resigned because they were involuntarily terminated when Excellence “ceased operations”
on September 22, 2010.
Excellence, on the other hand, contends the Brooks Appellants voluntarily terminated or
resigned and were therefore bound by the compensation provisions for voluntary termination—
“any loan closed and funded up to and includ[ing] the effective date of termination.” Moreover,
none of the ninety-one loans about which the Brooks Appellants complain closed and funded
before October 1, 2010.
Whether the termination was voluntary or involuntary requires an analysis of the summary
judgment evidence.
a. Resignation Letters
The letters of resignation submitted by the Brooks Appellants were effectively identical
and provided as follows:
The purpose of this letter is to announce my resignation from Excellence Mortgage,
Ltd and/or Georgetown Mortgage, LLC. As per my executed compensation plan
with Excellence Mortgage, Ltd., I would expect my final pay to include all
commissions due for August and September 2010 closed loan files.
We note the letters do not mention Excellence “ceasing operations.” Additionally, by all accounts,
when the letters were presented to Excellence management, all four individuals believed they were
resigning their positions of employment.
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b. Evidence Offered by the Brooks Appellants that Excellence Ceased
Operations
The Brooks Appellants’ summary judgment evidence, offered to support their theory of
involuntary termination, included (1) Robin Morton’s affidavit, the president of Excellence from
July 2001 to September 2010, (2) John Hudson’s affidavit, the area manager at Premier, (3) an
assumed name certificate—Georgetown Mortgage, LLC d/b/a Excellence Mortgage, dated
September 29, 2010, (4) the branch manager agreement between Kevin Sullivan and Georgetown,
(5) Stefen D. Brooks’ affidavit, and (6) the video depositions of Kevin Sullivan and Mitzi
Hutchens.
i. Morton and Hudson Affidavits
Morton was terminated from her employment at Excellence between September 22, 2010
and September 24, 2010. In her affidavit, Morton averred Excellence ceased operation on the
same day she was fired, “simultaneous to my termination [Excellence] went out of business.” She
opined that when Excellence fired her, it turned over its mortgage business to Georgetown and that
Excellence customers, staff, and investors were intentionally misled to believe they were still
working with the same originating mortgage company, Excellence Mortgage.
Hudson, the area manager with Premier, testified that the identity of pipeline borrowers,
which Appellants were handling at the time their employment with Excellence ended, was neither
proprietary nor confidential and was actually publically recorded. Hudson also concluded that
because Georgetown had taken over Excellence, and Morton, their licensed broker was no longer
at the company, Excellence no longer had the ability to originate and process loans.
Excellence filed objections to both affidavits and motions to strike the evidence.
Specifically, Excellence argued Morton and Hudson were incompetent to provide the questioned
testimony and the testimony contained within the affidavits was conclusory and speculative. We
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agree with Excellence. Neither Morton nor Hudson provided any basis for their opinions. See
TEX. R. CIV. P. 166a(f). 4 Additionally, neither affiant provided personal knowledge about the
management decisions at Excellence or the legal status of Excellence as to when the company
ceased to operate. See id.; TEX. R. EVID. 602 (“A witness may not testify to a matter unless
evidence is introduced sufficient to support a finding that the witness has personal knowledge of
the matter.”).
ii. Assumed Name Certificate and Branch Manager Agreement
between Kevin Sullivan and Georgetown Mortgage
The Brooks Appellants contend the assumed name certificate and the agreement for
Sullivan to act as the bank manager are further proof Excellence ceased operations prior to the
letters of resignation. The fact that Sullivan was hired as an employee of Georgetown has no legal
significance as to whether Excellence Mortgage was a legal entity. In fact, the agreement does not
mention Excellence Mortgage or any relationship between Georgetown and Excellence.
Additionally, evidence that Georgetown Mortgage is conducting business under the assumed name
of Excellence Mortgage does not provide any evidence as to whether Excellence Mortgage, Ltd.
ceased operations. We, therefore, conclude these documents provide no evidence as to the
operations of Appellee Excellence Mortgage, Ltd., and much less that it ceased operating as a
company. See TEX. R. CIV. P. 166a(c), (f).
4
Texas Rule of Civil Procedure 166a(f) provides:
Form of Affidavits; Further Testimony. Supporting and opposing affidavits shall be made on
personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show
affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified
copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served
therewith. The court may permit affidavits to be supplemented or opposed by depositions or by
further affidavits. Defects in the form of affidavits or attachments will not be grounds for reversal
unless specifically pointed out by objection by an opposing party with opportunity, but refusal, to
amend.
TEX. R. CIV. P. 166a(f).
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iii. Affidavit of Stefen Brooks
The Brooks Appellants offer the affidavit of Stefen Brooks, an interested party, to support
their claim that Excellence loan officers were trained without pay by Georgetown. Brooks’s
affidavit is directly contradicted by the testimony of Hutchens and Sullivan.
Summary judgment may be granted on uncontroverted affidavits from interested parties;
but such evidence must be clear, positive, direct, credible, free from contradictions, and susceptible
of being readily controverted. See TEX. R. CIV. P. 166a(c). Conclusory statements in affidavits
do not constitute competent summary judgment evidence. See Burrow v. Arce, 997 S.W.2d 229,
235–36 (Tex. 1999) (concluding affidavits that are “nothing more than a sworn denial of plaintiff’s
claims” are insufficient to support summary judgment; further stating that an affiant “cannot
simply say, ‘Take my word for it; I know’”).
Here, the testimony in question is not free from contradictions. Contra TEX. R. CIV. P.
166a(c). Additionally, none of the resignation letters make an assertion that the Brooks Appellants
were not paid for the days in question, and Sullivan’s testimony directly contradicts such a
conclusion. Moreover, the pleadings contend Excellence failed to pay commissions on the loans
in question, not that Excellence required them to attend training without pay. Therefore, Brooks’s
affidavit is not proper summary judgment evidence. See generally TEX. R. CIV. P. 166a(f).
iv. Video Depositions of Kevin Sullivan and Mitzi Hutchens
The Brooks Appellants further argue the video depositions of Sullivan and Hutchens
provide evidence that “they did not and could not have worked for Excellence after September 23,
2010.” The testimony does not support such contentions.
Hutchens, a corporate trainer for Georgetown, testified each of the loan officers signed
paperwork allowing their “MLS licenses” to be updated for Georgetown Mortgage doing business
as Excellence Mortgage. She explained she did not know the legal ramifications or whether
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Excellence was still operating. When questioned further, Hutchens explained the loan officers
“were already on board with Excellence Mortgage. They had an option to stay on board or to go
elsewhere. They were already hired before [Georgetown] came on board.” Hutchens explained
to each loan officer that everything would remain the same about their employment until benefits
could be discussed at a later time. Each of the loan officers, however, resigned prior to any
information about changes to their benefits. Although the Brooks Appellants contend the evidence
establishes they were not paid during their training on the Georgetown computer system, there is
no evidence that any of the Brooks Appellants were paid differently during the week of training
than during any other time they were employed at Excellence.
Sullivan testified that Excellence ceased to operate at some point during the first week of
October, but he was unsure of the exact date. Sullivan explained the owners decided to proceed
in a different direction. The plan was to phase out Excellence and it was to become MG Mortgage.
He explained that all of the Excellence loan officers, specifically the Brooks Appellants, were told
no changes would be made to their pay structure, commissions, or benefits at that time, but that
management would be reviewing all aspects of the business.
For these reasons, we conclude neither deposition is probative evidence that the Brooks
Appellants “did not and could not have worked for Excellence after September 23, 2010.”
d. Analysis
Although the Brooks Appellants provided several affidavits, documents, and depositions
as evidence that Excellence ceased operations prior to the submission of their letters of resignation,
the evidence does not raise a genuine issue of material fact. The record does not contain any
competent summary judgment evidence that Excellence Mortgage ceased operations prior to the
Brooks Appellants’ resignations thereby rendering the termination of their employment as
involuntary. See TEX. R. CIV. P. 166a(c), (f).
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We conclude the letters are probative evidence that the Brooks Appellants voluntarily
terminated their positions with Excellence. The summary judgment evidence does not controvert
the evidence adduced by Excellence that each Brooks Appellant resigned. There was no issue of
material fact and Excellence was, therefore, entitled to summary judgment on this issue. See TEX.
R. CIV. P. 166a(c); Diversicare, 185 S.W.3d at 846 (Tex. 2005); Nixon, 690 S.W.2d at 548.
Because there is no evidence that Excellence ceased operations prior to October 1, 2010,
and there are four uncontroverted resignation letters providing the effective date of October 1,
2010, we conclude Excellence conclusively established its affirmative defense, that the Brooks
Appellants voluntarily resigned their positions as loan officers under their Employment Agreement
with Excellence Mortgage. See City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005).
Accordingly, the trial court properly granted summary judgment in favor of Excellence as
to the alleged entitlement of commissions for loans closed and funded prior to October 1, 2010.
4. Quantum meruit
The Brooks Appellants further contend they are entitled to reasonable compensation for
their portion of loan services performed on loans which closed after they left their employment.
Because we have already established the Brooks Appellants voluntarily terminated their
employment, we conclude they are entitled to compensation in accordance with Excellence’s
personnel compensation plan:
With respect to a voluntary termination, it is the Company’s general policy not to
pay any commissions on loans that close and fund after the effective date of the
Loan Officer’s termination.
We, therefore, overrule the Brooks Appellants’ claims of reasonable compensation for loan
services performed on the pipeline loans based on quantum meruit.
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C. Appellants’ Claims of Interference with Prospective Business Relations against
Excellence
1. Arguments of Parties
Appellants contend there is a reasonable probability that Appellants would have entered
into further business relations with most, if not all, of the ninety-one prospective pipeline
customers if Excellence had not filed its suit based on a covenant not to compete. Appellants argue
that contrary to Excellence’s contention that information about its pipeline customers was
“confidential information” protected under Excellence’s employment agreement, Excellence was
attempting to convert the language in the employment agreement to a non-compete clause.
Specifically, Appellants contend Excellence intentionally interfered with these
relationships by unlawful conduct—filing the groundless injunction suit against Appellants and
Premier. Appellants argue the suit was asserted in bad faith, and based on the filed suit, Excellence
misrepresented to prospective borrowers that they could not legally do business with Premier.
Further, Excellence had no right to prevent Premier from accepting files, voluntarily transferred
by the customers, from Excellence to Premier.
Excellence’s position is that Excellence’s information pertaining to its customers, learned
by virtue of being an employee of Excellence, belongs to Excellence. Although Excellence sought
to protect the names, phone numbers, and loan information on the pipeline customers, Excellence
also sought to protect over 9,500 accounts with information including, but not limited to, builder
names, builder lists, builder phone numbers, account balances at MG Lumber Supply, builder
purchases at MG Lumber, and each customer’s outstanding ledger balance.
2. Elements of Claim
To recover damages on a claim for tortious interference with a prospective relationship,
the plaintiff must prove (1) there was a reasonable probability that the plaintiff would have entered
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into a business relationship with a third party; (2) the defendant either acted with a conscious desire
to prevent the relationship from occurring or knew the interference was certain or substantially
certain to occur as a result of the conduct; (3) the defendant’s conduct was independently tortious
or unlawful; (4) the interference proximately caused the plaintiff injury; and (5) the plaintiff
suffered actual damage or loss as a result. Wal–Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 713
(Tex. 2001); accord COC Servs., Ltd. v. CompUSA, Inc., 150 S.W.3d 654, 679 (Tex. App.—Dallas
2004, pet. denied).
In determining whether an actor’s conduct in intentionally interfering with a prospective
contractual relation of another is improper, the Second Restatement of Torts provides
consideration should be given to the following factors:
(a) the nature of the actor’s conduct,
(b) the actor’s motive,
(c) the interests of the other with which the actor’s conduct interferes,
(d) the interests sought to be advanced by the actor,
(e) the social interests in protecting the freedom of action of the actor and the
contractual interests of the other,
(f) the proximity or remoteness of the actor’s conduct to the interference and
(g) the relations between the parties.
RESTATEMENT (SECOND) OF TORTS § 767 (1979); Boyles v. Thompson, 585 S.W.2d 821, 831 (Tex.
Civ. App.—Fort Worth 1979, no writ). The Supreme Court extended this list to look at the
defendant’s conduct and determined that beyond the factors provided by the Second Restatement
of Torts, plaintiffs’ recovery is generally allowed only when the defendant’s conduct was either
independently tortious or violated a law. Sturges, 52 S.W.3d at 725–26.
3. Analysis
The tortious act alleged by Appellants is the filing of this lawsuit, an allegedly baseless and
groundless suit. Yet, Appellants do not point this court to any evidence supporting their allegation
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that the suit was groundless. Given the summary judgment evidence in this case, there is nothing
tortious about using the legal process to prevent loss of customers.
Filing a lawsuit is not independently a tortious act. Gaia Techs., Inc. v. Recycled Prods.
Corp., 175 F.3d 365, 377–78 (5th Cir. 1999); Sakowitz, Inc. v. Steck, 669 S.W.2d 105, 107 (Tex.
1984), overruled on other grounds by Sterner v. Marathon Oil Co., 767 S.W.2d 686 (Tex. 1989).
Likewise, “[e]nforcing or complying with one’s own valid contract does not constitute
unjustifiable interference with another’s contract.” Gulf Liquids New River Project, LLC v. Gulsby
Eng’g, Inc., 356 S.W.3d 54, 77 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (citing Maynard v.
Caballero, 752 S.W.2d 719, 721 (Tex. App.—El Paso 1988, writ denied)).
Here, Excellence’s employment agreement specifically gives Excellence the right to seek
injunctive relief for failure to return company information, including customer information, after
leaving employment. Specifically, the agreement provides
Employee’s breach of [confidential information paragraph] shall give the Company
the right to obtain a temporary restraining order and preliminary or permanent
injunction enjoining Employee from violating this Agreement in order to prevent
immediate and irreparable harm to the company.
This is exactly what Excellence filed. Even if Excellence did not prevail on its suit, without any
supporting evidence, we cannot conclude that Excellence lacked good faith when it filed suit or
that no reasonable litigant could expect to succeed on the merits. Excellence conclusively
disproved Appellant’s required element of “a willful and intentional act of interference with the
contract.” Accordingly, we conclude the trial court properly granted summary judgment in favor
of Excellence on the tortious interference claims. See TEX. R. CIV. P. 166a(c); Rubio, 185 S.W.3d
at 846; Nixon, 690 S.W.2d at 548.
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D. Appellants’ Antitrust Claims against Excellence
1. Argument of the Parties
Appellants contend that Excellence filed a groundless injunctive lawsuit and that
Excellence used the suit as a justification for its unlawful refusal to transfer the loans as requested
by the prospective borrowers. As such, Appellants contend that Excellence’s actions constituted
a “contract, combination, or conspiracy in restraint of trade” as prohibited by Texas Business and
Commerce Code section 15.05. TEX. BUS. & COM. CODE ANN. § 15.05 (West 2011); see id.
§ 15.01 (identifying the Act as the Texas Free Enterprise and Antitrust Act of 1983 (Texas
Antitrust Act)).
More specifically, Appellants contend Excellence’s actions had an adverse effect on
competition in the relevant market, i.e., San Antonio. See Winston v. Am. Med. Int’l, 930 S.W.2d
945, 951–52 (Tex. App.—Houston [1st Dist.] 1996, writ denied). Because Appellants handled a
substantial portion of the dual, construction-to-permanent loan transactions executed in the greater
San Antonio area, Excellence lessened competitive conditions in a relevant market. Appellants
argue that Excellence used greater restraint than necessary to protect its goodwill or other business
interests because Excellence had ceased doing business at the time the suit was filed. They
conclude that Excellence’s actions were willful and flagrant, and resulted in financial injury to
Appellants.
Excellence counters that the confidentiality provision was a “non-disclosure agreement,”
not a covenant not to compete and is, therefore, beyond the reach of the Act. Marsh USA Inc. v.
Cook, 354 S.W.3d 764, 768 (Tex. 2011) (citing CRC–Evans Pipeline Int’l, Inc. v. Myers, 927
S.W.2d 259, 265 (Tex. App.—Houston [1st Dist.] 1996, no writ) and Zep Mfg. Co. v. Harthcock,
824 S.W.2d 654, 663 (Tex. App.—Dallas 1992, no writ)) (“Agreements not to disclose trade
secrets and confidential information are not expressly governed by the Act.”).
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2. Texas Business and Commerce Code § 15.05
Section 15.05 of the Texas Business and Commerce Code, provides as follows:
(a) Every contract, combination, or conspiracy in restraint of trade or
commerce is unlawful.
(b) It is unlawful for any person to monopolize, attempt to monopolize, or
conspire to monopolize any part of trade or commerce.
TEX. BUS. & COM. CODE ANN. § 15.05. To establish that a defendant contracted, combined, or
conspired in restraint of trade in violation of section 15.05(a), a plaintiff must show that the alleged
contract, combination, or conspiracy is unreasonable and had an adverse effect on competition in
the relevant market. See Winston, 930 S.W.2d at 951–52; Marlin v. Robertson, 307 S.W.3d 418,
427 (Tex. App.—San Antonio 2009, no pet.). “Without a showing of actual adverse effect on
competition, [a plaintiff] cannot make out a case under the antitrust laws.” MJR Corp. v. B & B
Vending Co., 760 S.W.2d 4, 22–23 (Tex. App.—Dallas 1988, writ denied). Therefore, the question
before the trial court was whether Excellence’s confidentiality provisions were unreasonable and
had an “adverse effect on competition in the relevant market.” Marlin, 307 S.W.3d at 427.
The Texas Antitrust Act does not prohibit all restraints of trade, but only those resulting in
an unreasonable restraint. DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 687 (Tex. 1990);
Marlin, 307 S.W.3d at 427. Nondisclosure covenants are not considered restraints on trade
because they do not restrict one’s ability to compete with a former employer or prevent an
employee from using general knowledge, skill, and experience. Zep Mfg. Co., 824 S.W.2d at 663;
see also Shoreline Gas, Inc. v. McGaughey, No. 13-07-364-CV, 2008 WL 1747624, at *10 (Tex.
App.—Corpus Christi Apr. 17, 2008, no pet.) (mem. op.). Texas law also provides the formation
of an employment relationship forbids an employee from using confidential or proprietary
information acquired during the relationship in a manner adverse to the employer. T-N-T
Motorsports, Inc. v. Hennessey Motorsports, Inc., 965 S.W.2d 18, 21–22 (Tex. App.—Houston
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[1st Dist.] 1998, pet. dism’d). This obligation survives termination of employment. Id. An
employer may not bar use of general knowledge, skill, and experience, but an employer may
prevent the former employee’s use of confidential information or trade secrets acquired during the
course of employment. See Miller Paper Co. v. Roberts Paper Co., 901 S.W.2d 593, 600–01 (Tex.
App.—Amarillo 1995, no writ); see also Am. Precision Vibrator Co. v. Nat’l Air Vibrator Co.,
764 S.W.2d 274, 278 (Tex. App.—Houston [1st Dist.] 1988, no writ).
3. Analysis
This case turns on whether (1) Excellence was protecting confidential information or (2)
the information was readily available and Excellence was attempting to restrict the Appellants’
ability to compete.
We first look to the relief sought by Excellence in its original pleadings to determine the
true relief desired. The application for injunctive relief requested Appellants be enjoined and
restrained from utilizing Excellence’s confidential information as defined by the Employment
Agreement and the Employee Confidentiality Agreement:
Employment Agreement
4. Confidential Information
(a) Provision of Confidential Information. On the effective date of this
Agreement and throughout the Employee’s employment with the
Company, the Company shall, in order for the Employee to properly
and effectively perform his or her job, provide the Employee with
confidential business information. The Company promises to
continue to provide Employee with such information during the
course of the Employee’s employment with the Company.
(b) Employee to Maintain Confidentiality. The Employee
acknowledges that he/she occupies a position of trust and
confidence in the Company, and the Employee agrees that he/she
will not, without the prior written consent of the Company, disclose
or make known to any person or use for his/her own benefit or gain
any confidential information of the Company. Confidential
information means any information not generally disclosed or
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known to the trade or public concerning the Company, its business,
and its customers. For purposes of this Agreement, confidential
information shall include, but is not limited to, the following: (1) all
information (whether maintained in the Company’s computer
databases, printed reports, paper files, notes, correspondence,
rolodexes however kept, personal computers, PDA’s, or any place
else) relating to the Company’s customer’s[sic], including the
identity of the Company’s customers, customer personal data
information, customer contact information, customer account
information and balances, and customer investment preferences; (2)
all information relating to the Company’s business and marketing
plans; and (3) any other information that the Company designates as
confidential.
Employee Confidentiality Agreement
All information provided to Excellence Mortgage, Ltd. regarding borrower/co-
borrower income, assets, and all other information pertinent to their loan transaction
is private and sensitive in nature and considered confidential. Confidential
information should not be discussed by any employee unless it [ ] pertains to his or
her specific job requirements.
Appellants counter that the information used to contact and continue their work with the
pipeline customers was information available outside of Excellence’s employment. Specifically,
Appellants contend
1) the identities of (non-repeat) customers were recorded in public real estate
records when construction (interim) loans were made;
2) Excellence circulated the list of its pipeline customers to its wholesale
lender pool (Premier) while seeking loans for them and to insurance agents
while assisting the customers in shopping for competitive homeowners
insurance premium;
3) Information was not limited to Excellence’s management employees, all
Excellence employees knew the names in the regular course of business;
4) Residential mortgage loan customers are generally one-time customers;
5) Loans are sold by loan officers, not management;
6) Customers are not contractually bound to Excellence;
7) Excellence did not have a list of repeat customers developed and protected
over a long period of time; and
8) Appellants knew the customers, did not need a list from Excellence, and did
not take any documents or customer lists when they left.
Once again, although Appellants point this court to a list of complaints, there is no probative
evidence to support their contentions. See TEX. R. CIV. P. 166a(c), (f); Burrow, 997 S.W.2d at
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235–36. The record does not support that the information the Brooks’ Appellants utilized to
contact the “pipeline customers” was located by means other than through Excellence’s
confidential information.
Excellence contends that the information used by Appellants was confidential information
not available to the public. Attached to the motion for summary judgment was Sullivan’s
deposition, a person with first-hand knowledge of the information provided to the employees. See
TEX. R. CIV. P. 166a(f). Sullivan explained that not only was the information about the customers
in question provided by Excellence to the Appellants, but that Excellence spent years gathering
the information and that such information was not available to the public.
Appellants attempt to couch their argument in terms of an unreasonable covenant not to
compete, yet the plain language of Excellence’s requested relief was to enforce the nondisclosure
covenants contained within the employment agreements. Zep Mfg. Co., 824 S.W.2d at 663.
Information containing the names and addresses of individuals with whom the loan officers came
into contact during their employment at Excellence, is precisely the information Appellants each
contracted with Excellence not to disclose. There is no evidence Excellence sought to prevent
Appellants from working or being employed by Premier; they simply sought the protection of the
confidential information outlined in Appellants’ employment agreements.
Accordingly, section 15.05 of the Texas Business and Commerce Code’s prohibition
against antitrust actions does not apply and the trial court properly granted summary judgment in
favor of Excellence. See Marsh USA Inc., 354 S.W.3d at 768.
CONCLUSION
Appellant Johanna Barton was terminated by Excellence and the compensation owed was
outlined in her employment agreement. The Brooks Appellants voluntarily terminated their
employment by letters of resignation on October 1, 2010. Thus, in accordance with Excellence’s
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personnel compensation plan, and the resignation letters, the Brooks Appellants were only entitled
to commissions on loans that closed and funded before October 1, 2010. We, therefore, conclude
the trial court properly granted summary judgment in favor of Excellence and denied Appellants’
breach of contract and quantum meruit claims.
As to the tortious interference claims, there is no evidence to support Appellants’ claim
that Excellence’s lawsuit was groundless and filed as an attempt to prevent Appellants from
working in their field of work. Whether Excellence would ultimately prevail on the suit is
irrelevant. The fact remains that the employment contract signed by each loan officer provided
Excellence with the right to seek injunctive relief for the improper use of Excellence’s confidential
information. Because the summary judgment evidence conclusively disproves that Excellence
undertook “a willful and intentional act of interference with the contract,” we conclude the trial
court properly granted summary judgment in favor of Excellence on the issue of tortious
interference with prospective contractual relations.
Finally, the allegations concerning antitrust violations are also unfounded. Excellence’s
injunction sought nothing more than to prevent dissemination of the client information in
accordance with their employment agreement and there is no evidence the suit was an attempt to
prevent Appellants from competing in the loan mortgage business. We, therefore, conclude that
because the prohibition against antitrust actions is inapplicable to this case, the trial court properly
granted summary judgment in favor of Excellence.
Patricia O. Alvarez, Justice
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